Light-rail contractor sues Metro for $19 million

The contractor that built three miles of light-rail line along Phoenix's Central Avenue has sued Metro and is seeking at least $19 million in damages.

Missouri-based Herzog Contracting Corp. alleges in a 10-count breach of contract complaint filed in Maricopa County Superior Court that Metro rail failed to properly disclose to the firm where the utilities were before work crews dug in the streets.

The street work was a source of frustration for many merchants along Central Avenue, who complained that it seemed to drag on endlessly.

Herzog alleges it found "hundreds of unidentified, misidentified or mislocated" underground utilities. Crews found discrepancies "almost immediately." Within a year of starting work on the $55 million contract, Herzog warned the work would take an extra year, the company argues in its lawsuit.

Instead, Herzog said it hired extra subcontractors to speed up the work at Metro's insistence. Even after Metro adjusted the entire schedule in mid-2006, the project was delayed another 191 days and Herzog submitted about 200 change orders, the company alleges.

Herzog said the situation got so bad that it had to idle work crews or reassign them, only to find unforeseen problems in the new work sites.

Metro Chief Executive Officer Rick Simonetta said participating cities conducted the engineering on utilities and that Metro's change-order process and contingency budget covered the cost of construction surprises. Metro has not answered the complaint in court but issued a statement saying, "The case is complex and will take some time to resolve. Metro has no reason to believe that any other cases will be filed in the court arising out of the construction of the Central Phoenix/East Valley Project."

The case is potentially costly for the agency. Metro's total operating budget is $34 million, and little money remains in Metro's construction contingency fund. The agency would have to cover any losses in the lawsuit from its budget or ask member cities to help.

Herzog is seeking a court order to stay the case and allow time to settle the claims out of court.